April 23, 2024
income tax

Which companies can opt for corporation tax?

Due to their legal status, some companies are subject to the regime of partnerships: income tax . However, they have the possibility of choosing optionally, that is to say optionally, to be subject to corporation tax (IS) . The companies concerned are:

The individual entrepreneur who has chosen the status of EIRL must have previously filed a declaration of allocation of assets in the register of legal publicity.

EIRLs under the micro-enterprise tax regime , wishing to be subject to IS , must first declare their activity according to an actual tax regime .

How to opt for corporation tax?

by decision of the operator in the event of exercise in a sole proprietorship

or for companies, under the conditions provided for by the articles of association or, failing that, with the unanimous agreement of the partners if the articles of association do not provide for any particular method of exercising the option.

It is possible to file an option request for corporation tax:

when setting up your business, by ticking the box provided for this purpose on the business creation form submitted to the competent business formality center (CFE) ( PO form for sole proprietorships or MO form [PDF – 612 .25 KB] for companies)

after the creation of your company, by notifying your request for option for IS to the business tax service (SIE) of your main establishment. This request must be made at the latest before the end of the 3rd month of the financial year for which you wish your company to be subject to IS.

Individual entrepreneurs transformed into an EIRL must send their request to their SIE within 3 months of this transformation.

The option request must indicate:

the name of the company and the address of the registered office

the surnames, first names and address of the operator (sole proprietorship) or of each of the partners in the event of a partnership.

Revocability of the IS option

Since 2019 there is a right of revocation of the option for corporation tax.

This option must be revoked no later than the end of the month preceding the deadline for payment of the 1 st installment of IS and the 5 th financial year following that for which it was exercised.

What are the consequences for the taxation of taxable profit?

By opting for corporation tax (IS), your company becomes taxable as a legal entity on the profits made in France during the annual financial year.

The corporate tax rate is a fixed rate operating in stages depending on the type of business and its level of results.

For fiscal years beginning January 1 to December 31, 2020, the standard corporate tax rate is 28% on all taxable income . Large companies are taxed at the rate of 33.33% on the fraction of profits above €500,000.

Small and medium-sized enterprises whose turnover is less than €7.63 million can benefit from a reduced rate of 15% on the portion of their profits below €38,120.

Your company’s net profit, less executive compensation, must be reported on the corporation tax form .

Executive compensation and dividends received must be declared on the personal income tax return in the boxes provided for this purpose: “wages and salaries” and “income from securities and movable capital”.

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